New Zealand Government to Use Emission Trading Scheme to Fund EV Rollout

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New Zealand families will be encouraged to scrap their old vehicles in exchange for low-emission alternatives under the government’s Emissions Reduction Plan, with more details to be revealed when the 2022 budget is released.

“This is a landmark day in our transition to a low emissions future,” Prime Minister Jacinda Ardern said. “This is a challenge I know New Zealand can succeed in. Our plan is achievable because it includes a role for government as well as for every community and sector of the economy.”

One goal under the plan is to have electric vehicles make up 30 percent of the light fleet by 2035, a scheme that will cost around $569 million (US$360 million) under the Climate Emergency Response Fund (CERF).

CERF will be established with $4.5 billion (US$3 billion) from emissions trading scheme revenue, with an initial allocation of $2.9 billion over four years.

“Starting with an initial trial of up to 2,500 vehicles, the Clean Car Upgrade will provide targeted assistance to lower and middle-income households to shift to low-emission alternatives in exchange for scrapping their old vehicle,” Transport Minister Michael Wood said.

Another $20 million (US$13 million) under CERF will go into trialling a vehicle social leasing scheme, where families will be able to lease a low-emission vehicle from a community organisation.

Funding has also been allocated to decarbonise the energy sector and move away from fossil fuels, having curbside food waste collection at every home to reduce waste, public transport with national integrated ticketing, and more.

It also aims to have more of New Zealand’s biggest businesses powered by renewable energy generated domestically and end reliance on coal.

An electric car is plugged in in Irvine, Calif., on Jan. 26, 2015. (Lucy Nicholson/Reuters)

The opposition National Party said while it supported the government’s emissions targets, including annual caps on greenhouse emissions and net-zero by 2050, it was concerned that the emissions reduction plan was a poor use of taxpayer money.

“We expect those companies to be cutting their emissions without help from taxpayers. A significant part of the government’s plan looks like a corporate carbon bailout,” National Party Leader Christopher Luxon said, adding that much of the plan lacked detail.

In response, Finance Minister Grant Robertson said the government had brought in private capital and advanced work needed to reduce emissions.

“So we believe it’s a partnership,” he told reporters.

The ACT Party climate change spokesman Simon Court said the new Clean Car Upgrade scheme was a waste of taxpayer money.

“Cash for clunkers was trialled in the USA and it was a total disaster. It cost a fortune and effectively just subsidised expensive vehicle purchases that were likely to happen anyway,” he said. “It’s a pointless waste of money when transport is already within the Emissions Trading Scheme.”